ELCDC - Accessing the 504 Program

Financing

Projects are financed through a unique public/private partnership that involves the small business concern, the ELCDC/SBA, and private sector lenders. In the 504 loan structure, the small business concern (applicant) puts up a minimum of 10% of the total funds for a project. Single purpose type facilities could require up to an additional 5% down, and new/start-up businesses another 5%.

ELCDC provides up to 40% or $1,500,000 ($2,00,000 in certain cirucumstances), whichever is less, and may go up to $4,000,000 for small manufacturing firms with NAICS codes of 31-33. The private sector lender provides the balance of the money. The ELCDC/SBA portion of the loan is at a fixed rate for a term of 10 or 20 years. The bank portion of the loan is at market rates and terms, negotiated between the small business and the bank.

The ELCDC/SBA portion of the financing is actually funded by the sale of a 100% federally guaranteed debenture on the open market. The SBA 504 program is a take out financing program. ELCDC/SBA offer an up-front commitment to finance a project. The participating private lender provides interim financing, advancing up to 90% of the total project funds during the construction/acquisition period.

After the project is complete, proceeds from the debenture sale reimburses or "takes out" the participating private lender (by the net debenture amount of the original SBA authorization).

I. Financing

II. Eligibility

III. Terms & Rates

IV. Collateral

V. Identification Procedures

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